Source: TH
Context
The Union Cabinet has approved the National Investment Policy for Urea (NIPU) 2026 to establish 8–9 new gas-based urea plants with a production capacity of 10 million tonnes (MT). The policy aims to reduce India’s dependence on imported urea and strengthen fertilizer security.
Why is the Policy Needed?
- India consumes around 40 million tonnes (MT) of urea annually.
- Domestic production is about 30 MT, while nearly 10 MT (25%) is imported.
- Global events such as the West Asia conflict and disruption in the Strait of Hormuz caused urea prices to rise by 40–50%, highlighting India’s import dependence.
Key Features of NIPU 2026
- Establish 8–9 new gas-based urea plants.
- Add 10 million tonnes of annual production capacity.
- Improve transparency by separating fixed and variable costs.
- Introduce a 12–16% Return on Equity (RoE) band.
- Reduce foreign exchange risk by converting fixed costs into Indian Rupees after four years.
Why is the Policy Important?
- Reduces dependence on imported urea.
- Improves fertilizer availability during global supply disruptions.
- Supports India’s food security.
- Encourages domestic fertilizer manufacturing.
- Soil Health Concerns
- Recommended N:P:K nutrient ratio:
- 4 : 2 : 1
- Current ratio in India:
- 9.8 : 3 : 1
